Station Owners Step on the Gas to Meet Improvement Deadline

By Sally MaisonPublished: Tuesday, December 29th, 2009

Backhoes, dug up pavements, and fenced lots are becoming a familiar sight in Southern Florida as gas station owners speed it up to meet the deadline for the replacement of their storage tanks. Gas stations that will not be able to replace their storage tanks by the end of the year with double-walled tanks will be forced to shut down by the local government. However, some station owners fear that their credit score would hinder them from getting an upgrade, which could eventually lead to their businesses’ closure.

In an aim to protect the state’s underground water system, the Florida Department of Environmental Protection is requiring filling stations to replace their old storage tanks with the more durable, less leak-prone double walled tank. Owners who are not able to meet the Dec. 31 deadline will be fined and court-ordered to close down their business.

Proprietors who have a binding contract on their facilities will not be required to have their upgrade by Dec. 31. Instead, their deadline will be set on three months later, on Mar. 31. However, industry analysts believe that about anywhere from five to 18 percent of filling stations will not be operating legally next year.

Brothers Steve and Ralph Amodie, who operate a station in Lake Worth, saw the mandatory change coming ten years ago. However, they have not yet prepared for the expenses that it would cost them. The $300,000 cost for tank replacement is just too much for the brothers who are operating a marginal filling station. Moreover, most banks require a credit score of at least 700 for loans ranging from$100,000 to $300,000.

Finance specialist Len Baccaro explained that many small-time entrepreneurs, including gas station owners, are finding it difficult to borrow money because of new lending standards by creditors. He also noted that lenders remain reluctant to give out loans, making the future bleaker for many consumers.

Baccaro said lending criteria are very tights these days as most creditors require entrepreneurs to be in the business for five or four years, with their credit score no less than a prime rating.

Jim Smith, CEO of an industry group in Florida, said it will not be known until April 1 next year which stations will continue servicing motorists. However, he predicts that small stations in rural areas are most likely to be shut down.

Analysts explained that small operators are not able to get financing even if they have a good credit score because banks also require their borrowers to be in the higher income level. Despite that, some experts are positive that their numbers will not be as big as earlier predicted.